Measuring Capacity Utilization in the Italian Manufacturing Sector: A Comparison Between Time Series and Survey Models in Light of the Actual Economic Crisis

The aim of this paper is to make a comparison between survey and time series-based estimates of capacity utilization for the Italian manufacturing sector. The comparison is focused on the actual economic crisis. Two kinds of empirical evaluation are implemented: the ability of the series to correctly track cyclical turning points and their contribution in explaining CPI inflation. The ISAE survey measures results to be lagging, especially at troughs, and moreover time series-based measures generally outperform the survey in explaining inflation.